Business Maverick

Business Maverick

The New Age: A growing media empire, built with your money

The New Age: A growing media empire, built with your money

The New Age, the pro-government newspaper owned by the Gupta family scored some R125 million in advertising in 2012, almost R75 million of it from government, parastatal or government-linked organisations. Not too bad for a brand-new newspaper that in 2012 didn’t even have certified circulation figures. It is likely The New Age will at least repeat this success in 2013, despite eschewing the print media industry’s gold standard for circulation measurement. By MANDY DE WAAL.

R125 million – that’s more or less how much money The New Age made from advertising in 2012 before discounts, according to a Nielsen report that The Daily Maverick has had sight of. Nielsen is the authoritative global resource for market research and measurement data. Some sixty percent of the windfall came from government – good news for the pro-government newspaper, but not such great news for taxpayers, who are essentially footing much of the bill that’s helping to fund the Gupta media business. 

Now in only its third year of operations, the newspaper achieved this advertising investment for January to December 2012 without any credible circulation figures. The New Age is not a member of the Audit Bureau of Circulations of South Africa (ABC), a non-profit organisation created through an agreement between media owners, advertisers, and advertising agencies to provide accurate and comparable circulation figures for print media, and to certify these figures. The ABC has an established and agreed standard that is audited, for the certification of publications’ circulations.

Government departments, agencies and parastatal organisations invested some R74,6 million with the newspaper, some 60% of The New Age’s total advertising revenues for 2012. The figures from Nielsen don’t include The New Age breakfasts, sponsorships or special packages that may have been negotiated by The New Age’s advertising sales team, and are an indication of the ad space sold off rate sheet in terms of what appeared in the daily paper. These figures could be skewed by barter deals or discounts on the full rate, but offer a fair indication of the paper’s advertising turnover for 2012. 

The biggest spender, according to the Nielsen data, was Telkom which invested R31,567 million with The New Age, this during the time when South Africa’s national telecoms company (which is 39% state-owned) turned in a poor financial performance.  For its financial year ending March 2012 (announced in June 2012), Telkom’s headline earnings dropped by 33%, while its revenue declined by 0.7%. The telecoms company was in the news this week after the Competition Commission revealed that Telkom agreed to pay a R449 million fine for abusing its dominance.

The next biggest New Age spender is South Africa’s national government which paid some R16,8 million to the paper for advertising. In ascending order the next government entities that lavished funds on New Age print commercials were Transnet (R7,3 million), Eskom (R3,29 million), the Free State provincial government (R2,69 million), and the Gauteng provincial government (R1,2 million). 

The data received by Daily Maverick corroborates an earlier story by City Press that Telkom was responsible for a third of the paper’s advertising revenues. TNA Media’s Nazeem Howa responded to this story by calling City Press “patronising and racist”.

Although The New Age has to date elected not to be part of a credible, independent and verifiable means of measuring circulation, this hasn’t stopped the management and ownership of the newspaper from finding its own solution to the issue of verifying its circulation.

Earlier in April 2013, The New Age sent out a media release boasting that it had ‘outperformed the market’ with a readership growth of 174%. The data used to make this claim was from the latest figures released by the South African Audience Research Foundation (SAARF). 

In its release, The New Age claims: “The figures released yesterday by the SA Audience Research Foundation for the period January to December 2012 show that overall newspaper penetration has not shifted over the past year. The New Age is the only newspaper to have shown growth over the past year. The New Age’s average issue readership now stands at 107,000, and past six-month readership at 531,000.” What the release doesn’t mention is that this is off a very small base – The New Age started out with the smallest readership in the pool of daily newspapers measured.

This information was gleaned from the SAARF All Media and Products Survey (AMPS) which is an interview survey. For the AMPS survey, interviews are done with thousands of people who are representative of the total population of South Africa. As part of the survey, interviewees are asked about their usage of newspapers, including The New Age.

The release continues to state that the newspaper “enjoyed an impressive increase in subscribers over the year – consisting principally of CEOs, MDs and directors across private and public service sectors”, but doesn’t offer subscriber figures to back up this claim.

The media statement announces that The New Age has commenced “a process of circulation auditing and verification through Deloitte, and certified circulation for February 2013 stood at 86,654 for paid and free copies.”

But advertising revenue isn’t the only sweet deal that The New Age is getting from government and co. In January 2013, Mail & Guardian published a story headlined Parastatals ‘bullied’ into supporting the ‘New Age’, the investigative weekly revealed that SAA had concluded a deal in April 2012 to purchase 63,000 copies of the pro-government newspaper a month. And with that deal, The New Age took care of just over 70% of its circulation problems.

Gordon Patterson, vice chair of the ABCs, says that The New Age’s decision to launch its own verification process with Deloitte makes no sense. “Obviously it is their right to choose how tthey verify their circulation. Obviously if it is not verified using the industry standard and accepted currency, it gets hard to compare apples with apples. It is a move in the right direction, but it is not an ABC. I don’t honestly understand the reluctance to not go the ABC route and it makes no sense from my perspective,” he said.

Ryan Williams, the former MD of Nota Bene (now with Cinemark) says that if The New Age had done this without good reason, he’d place a big question mark over the media. “The major issue is one of comparability. One can’t be sure that Deloitte will apply exactly the same methodology as the ABC does. For instance how would Deloitte categorise or verify free distribution? Do they use a different paper trail mechanic? Do the publishers supply the figures, or do Deloitte physically go out and audit with the printers? You don’t have any equity built up in the measure and the challenge for advertisers is whether this is a legitimate measure. The other problem is while Deloitte might be reputable, they are not a media auditing specialist,” says Williams.

Deloitte was asked for the latest breakdown of figures for The New Age, along with information on the process used for the audit, but their PR agency, Magna Carta, said the professional services firm declined to comment. “Unfortunately we’re not in a position to respond to your questions due to the standards we uphold with regard to client confidentiality,” was the response to Daily Maverick. 

Nazeem Howa, the newspaper’s CEO, is more forthcoming. “We never said we would not join the ABC,” says Howa. “From the beginning we said it would be a matter of time as we settle our systems.” He added that the decision not to verify with the ABC was related to the work of the Print and Digital Media Transformation Task Team (PDMTTT) set up to investigate and suggest ways of transforming the industry.

“Now that the focus is on our industry and we hear talk of competition commission inquir(i)es which impacted on the PDMTT process, we decided to adopt a wait-and-see approach to see how the process shakes down around all institutions controlled by the big four – including the ABC which is funded by the big four, while its board is made up of their representatives as well as those from the advertising and marketing industry. From my time as a director of the ABC, I know there were always concerns around compliance to the current competitions environment,” Howa says. (The big four are Naspers, Times Media Group, Caxton and Independent News & Media.)

“While we wait for the process to be completed, we opted to use Deloitte (although our auditors are KPMG) to perform a ‘full ABC process’ around circulation. Since the beginning of this year, we have had Deloitte in monthly, and we will now move that audit quarterly,” says Howa. Although the process is not a full ABC audit, it’s a Deloitte audit.

Writing in his occasional media blog, The Harbinger, Anton Harber, who directs the Journalism and Media Studies Programme at Wits University, states that the sales figures released by The New Age (with help from Deloitte) “are of dubious credibility.”

 “The 20-month-old paper says they have ‘commenced a process of circulation auditing and verification’, but still do not talk of joining the Audit Bureau of Circulation, the industry verification body, and therefore one has to treat all their claims with caution,” writes Harber.

“This is significant because without verified sales numbers their main sources of advertising – government departments and parastatals – are on difficult legal ground when trying to justify their expenditures. It is hard – if not impossible – to argue that public money is spent appropriately on sponsorship and advertising if there are no figures to demonstrate it,” the former editor of the Mail & Guardian adds.

Brand and reputation agency owner, Shauneen Procter, also has her doubts. “SAARF’s Amps are a broad indicator of media consumption, rather than an empirical means of calculating readership. If The New Age wants to be credible from a circulation or readership perspective it needs to be ABC verified,” says Shauneen Procter, CEO of Idea Engineers. “I don’t think the debate here is whether or not SAARF is credible, or whether the Deloitte’s methodology is credible, but rather why The New Age refuses to have its circulation interrogated. That in itself is what is worrying. The fact that The New Age isn’t open to scrutiny, means there’s a problem,” the brand and reputation agency boss says.

This is the same take that advertising doyen Chris Moerdyk has on the matter. “Certainly, it remains a mystery to me as to why the New Age doesn’t want to go the ABC route and I cannot blame its detractors for leaping to the obvious conclusion that its sales actually suck. Any print publication that doesn’t have that little ABC logo on its cover is actually going about its business the hard way,” writes Moerdyk in a recent BizCommunity column.

On its website, The New Age states that it prints and circulates 100,000 copies across the country each and every day, but in January this year a former employer told the Mail & Guardian that thousands of copies were returned for pulping. The unidentified employee stated that on instructions of the Gupta family, the returns were sent to India to be recycled. “They didn’t want it done in South Africa in case it got out,” Mail & Guardian quotes the source as saying.

TNA’s Howa rubbished these charges calling them ‘malicious’. However he refused to tell Mail & Guardian what the newspaper’s returns were, nor what the news publication’s single-copy sales for the past six months had been. The Daily Maverick has heard from its sources that government departments buy The New Age in quantity (often as part of an ad-sale deal), and that the papers often sit unread, and in bulk, in some offices.

Says Harber: “The newspaper said they printed and circulated 100,000 copies across the country. They say that their ‘audited’ circulation for February 2013 stood at 86,654 ‘for paid and free copies’. This is of dubious value not just because it has not been through the standard verification process, but because there is no breakdown of how many copies are actually paid for. Certainly they give away large numbers at airports, parastatals, universities and on the streets – so the bulk of these are probably give-aways.”

A one-time supporter of The New Age, based on the principle that it added to media diversity, Harber ends his piece with a damning indictment of the Gupta paper: “The New Age said in their media release that they were ‘driven by a new approach to newspapering’ and were in ‘determined pursuit of an innovative approach to editorial and advertising’. But hiding your sales figures is not very innovative. In fact, it is a practice as old as newspapering.”

Indeed, Daily Maverick remembers a time when a certain nationalist government invested some R64 million in a propaganda war, which included a slush fund to start a newspaper called The Citizen. Even the regime as vile as Apartheid simply had to pay for it by losing the Prime Minister BJ Forster. Our modern democracy, however, keeps muddling along. DM 

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